The world has long since lost the guard rail system that used to be so stable. And now he cares US-Israeli attack on Iran for further economic and stock market uncertainty. Nevertheless, despite the current frustration, the long-term positive consequences must also be taken into account if one of the most crisis-prone regions in the world hopefully soon calms down. In general, uncontrolled panic has always been a damn bad guide for investors.

The USA and Israel have stung a hornet’s nest

As an opponent, Iran is a whole different caliber than Venezuela. The country is large, highly armed and more resilient. Since the regime in Tehran has its back against the wall, it will use all its potential to survive or improve its negotiating position.

It is therefore also attacking neighboring countries, which have developed into particularly attractive and secure business locations for many years and therefore have a lot to lose. In this way, they should put pressure on Washington to end the armed conflict with Iran as quickly as possible.

Last but not least, Russia and China, as Iran’s allies, have no interest in one of their last geopolitical bulwarks against the American system enemy not only falling, but also in the threat of a new pro-Western, especially pro-American, government in the event of a regime change.

Consequences of the blockade of the Strait of Hormuz

And with the closure of the Strait of Hormuz, almost all of Saudi Arabia, Iraq, the United Arab Emirates and Kuwait’s OPEC reserve capacity – about 20 percent of the world’s oil supply – is blocked. This would mean significant price increases for oil and natural gas torpedo global economic growth.

In extreme cases, the hoped-for interest rate cuts would not materialize, especially in the USA, which would particularly affect stocks from the high-tech sector. And economically oriented capital stocks from the value sector, which have recently increased the market breadth and minimized risks, will lose this function.

At the industry level, chemical stocks would suffer, whose energy production costs rose without being able to be passed on to an unsettled global economy. This also applies to airlines that have had to deal with expensive detours and unsettled customers who are afraid of flying. Car companies would also be affected, as consumers tend to close their wallets in times of crisis.

Good luck in misfortune?

This time too, there is no threat of the end of the (financial) world. If the regime in Tehran, which causes most of the world’s conflicts, were to leave sooner or later, there would finally be more peace in the most crisis-ridden region.

Of course you can’t be naive. After 47 years of dictatorship, it is certainly not easy to flip the switch towards freedom. For example, who will be in charge of a new government? And of course, when it comes to a “wind of change,” Washington doesn’t just think of noble democratic motives. It is, of course, about improving its geopolitical position in the Middle East at the expense of Beijing and Moscow and ensuring smooth oil supplies. By the way, this must also be a concern for China.

Of course, from a purely legal perspective, America broke international law with its attack and the Trump administration certainly wants to distract attention from domestic political problems. Politics was, is and remains realpolitik.

A nuclear powder keg in the Middle East would be a nightmare

Overall, if Iran is deprived of the chance to become capable of nuclear weapons, that is good, even happy, news. It would be unthinkable if Tehran were to assert its power interests by wielding the nuclear weapon and dominate economically important energy supply chains.

In general, what argument can be used to prevent other countries like Saudi Arabia from becoming a nuclear power in order to maintain the balance of terror? A nuclear powder keg in the Middle East would be nothing short of a nightmare.

And let’s not kid ourselves: the Europeans’ decades-long policy of appeasement has never borne fruit. It was politically convenient and often hare-footed, although European history teaches that giving in to brutal dictatorships encourages them even more to assert their own interests.

Despite all the crises, remaining calm is the first duty of investors

Basically, stock market history teaches that panic selling is always the worst investor decision. In fact, in retrospect, past crises have mostly appeared to be manageable. Of course, there will be temporary disruptions in terms of growth, oil prices and supplies, and the security situation.

After all, Trump has scheduled the military conflict to last several weeks and Iran will vigorously defend itself against regime change until the end. But Trump will not risk a long war – like the Gulf War – with the use of ground troops, given his population’s war-weariness and the midterm elections.

Defensive values ​​are in demand

In the meantime, defense values ​​are in demand. Energy stocks benefit from higher oil production margins. Defensive qualities from the insurance and healthcare sectors are also in demand. Last but not least, precious metals are crisis winners.

May the conflict in the Middle East end successfully as soon as possible so that the world and Iran can breathe a sigh of relief again economically and the old stock market adage “Political stock markets have short legs” comes true again on the financial markets.